MTN is paying R1.6bn to make Benin licensing troubles go away

Lameez Omarjee

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Cape Town – Mobile operator MTN announced on Thursday that it concluded a memorandum of understanding with the government of Benin following a dispute with the regulatory authorities on the frequency of fees.

The MoU includes the settlement of historic frequency fees, a five-year licence extension and the addition of fibre to the loop (FTTx) to the existing licence conditions settled by the payment of XAF35bn (R796m) in May 2018 and a second payment of XAF35bn in December 2018.

Negotiations around future frequency fees are continuing and expected to be concluded by the end of June 2018, Group president and CEO Rob Shuter noted in the group’s performance for the quarter ended March 31.

This comes after a deterioration of relationships with regulatory authorities in Nigeria and Benin which date back a number of years.

Locally, MTN is engaging with authorities on the proposed amendments to the Electronic Communications Act, to deliver the “most cost-effective coverage” for South Africans and to provide “much needed" resources for the national fiscus.

Meanwhile, MTN also reported that it was making strides in the other African countries in which it operates.

MTN said its service revenue growth of 9.1% and group voice revenue growth of 5.4% was led by Nigeria and Ghana operations. The group also reported data revenue growth of 26.9%.

Progress in Africa

“In Nigeria and Ghana we made good progress on the IPO (Initial Public Offering) processes, which we aim to conclude during 2018.

“To this end, we will be releasing full financial results for MTN Nigeria on 7 May 2018. On 20 April 2018, we received all required regulatory approvals to proceed with the IPO in Ghana, which we expect to launch in late May 2018,” Shuter said.

MTN Nigeria increased service revenue by 14.4% year-on-year, a 73.2% increase in data revenue and 15.2% growth in voice revenue.

According to Shuter, MTN Nigeria's stronger-than-expected growth in revenue allowed the business to benefit from increased scale.

"With expenses well controlled, and the naira stable, the EBITDA margin expanded in the quarter to 41.8%.

"MTN Ghana benefited from the improving macroeconomic environment and stable competitive environment. The operation reported strong service revenue growth of 29.3% year-on-year, led by a 51.5% increase in data revenue."

Shuter added that MTN is making progress in Cameroon, where the group intends to sign a revised licence later this month. However Cameroon remains a “challenged market”, having recorded a worsening operating performance during 2017. Service revenue declined 6.8% year-on-year.

“Notwithstanding the weaker start to the year, we remain confident of the business returning to positive growth in the second half of the year,” Shuter said.

Voice revenue declined by 16.6% year-on-year, while data and digital revenue grew by an encouraging 15.7% and 106.0% respectively. Month-on-month revenue increased by 700% to account for 4.1% of service revenue.